Criminology Case Study: Enron13 min read

Apr 22, 2018

898

Criminology: Rational Choice Theory
Sociology: General Strain Theory & Social Disorganization Theory
Criminology Case Study: Enron Corporation
Criminology Theories: Rational Choice Theory
Sociological Theories: Social Disorganization Theory and General Strain Theory

Criminology Case Study: Enron Corporation
Criminology Theory: Rational Choice Theory
Sociological Theories: Social Disorganization Theory and General Strain Theory

The Enron Corporation
The Enron Corporation is the greatest corporate scandal and bankruptcy in American History. The legacy is one of White Collar Corporate Crime defined best in criminology as Rational Choice Theory coupled with the Social Mirror Effect and General Strain Theory. The Enron Corporation (1985–2001) operated for 16 years rising from 10 billion to 74 billion in total assets that exceeded 100 billion in financial revenue. In reality, Enron was a Energy Mega-Corporation ranked at the 7th largest United States Economic Institution. In 2001, the complex network of crime covered by the Enron Illusion’s web of lies came crashing down at the discovery of Enron’s debt being in billions of dollars. In 11/2001, Enron’s stock market price was at $90.71 to less than around 70 cents on the stock market. The Enron Corporation filed their Chapter 11 United States Bankruptcy Code in 12/2001. Enron is a criminology case study told through the criminology theory of Rational Choice Theory and the sociology theories of General Strain Theory and Social Disorganization Theory. Enron’s legacy is one of avarice and pride being the single greatest Corporate Scandal and Bankruptcy in American history.

Enron Founder, CEO, Ex-CEO, Mastermind, Architect Kenneth Lay
Enron Architect and Founder, Kenneth Lay was born a lower social-status of working class who worked through Rational Choice Theory after lifelong General Strain Theory interpretations rose from his humble origins to a prestigious mega-corporation CEO then Ex-CEO who innovated almost into complete rebellion due to lax White-Collar Criminal social labeling due to social-status allowing rampant Social Disorganization Theory. Kenneth Lay obtained his Ph.D in Economics from the University of Houston. Lay and Enron Executive Director associates shared a philosophical view of business of corporate enterprise free from government regulation. Enron Architect and Founder shared this collective ideal of Elitist Model of Business among other Capitalists comprised of Ayn Rand’s philosophy of Objectivism which was the perfect garden to be cultivated for Social Disorganization Theory. Social Disorganization Theory in practical application on the case of Enron, Capitalist Societies are lackadaisical and lenient on White Collar Criminals due to the criminal activity is the flow of commerce and the criminal environment is the master status economic institution of Capitalistic Societies which is revealing in how White Collar Criminals are essentially pardoned with a slap on the wrist if a Corporate Institution systematically in their business model use confidence artistry to scam millions of middle and working social class victims but if White Collar Criminals victimize the elitist social class then the punitive and retributive machines of justice will come crashing down on such perpetrators for Social Class determines the existential worth and value of the collective individuals in a Capitalist Society.

Objectivists core tenants are individualism, self-interest, libertarian laissez-faire capitalism without government involvement or regulation which in Rational Choice Theory and General Strain Theory would define the Elitists attitudes and behaviors of the bourgeoisie 1% of Mega-Corporate Financial Institutions to cause massive criminal damage that is sanctioned by softened retributive and punitive actions from Authority of the capitalist economic model of the United States allowing many White Collar Corporate Criminal Models such as Enron to operate as Anarchist-Capitalism (AnCaP) under Rational Choice Theory for them to indulge freely despite the pressures of General Strain Theory as the Social-Mirror Effect was one of prestige so Enron would do anything and everything to maintain a Master Status in the Economic Institution. Enron was a AnCap Culture as a operating Mega-Corporation. Admittedly or not, these antisocial collective values in the Enron subculture of Mega-Corporate Economic Institutions. Enron is a collective group of individuals who valued antisocial sociological-psychological defined by Machiavellianism, Malignant Narcissism, and AnCap subculture. The Founder, CEO, Ex-CEO, Mastermind, and Architect Kenneth Lay shared these characteristics by the collective of individuals that Kenneth Lay surrounded himself. This was the ideal environment for White Collar Crime to flourish as a legitimate economic institution of a corporation where innovators flourished on a narrative of lies and imaginary exponential monetary growth in accordance to Social Disorganization Theory.

The Valhalla Scandal
Social Disorganization Theory of a White Collar Criminal Economic Institution should have alerted Law Enforcement for extensive monitoring for General Strain Theory of Innovators striving for the status of Rebellion as the social-norm in Rational Choice Theory. These are statements which create an analysis of Enron’s first disclosure of corruption came in the Valhalla Scandal (Enron Oil Scandal) where two Enron traders were gambling on the price of oil rising or lowering which raised suspicion that were confirmed by anonymous tips concerning current Enron President Michael Borget that revealed the offshore banking accounts, falsified accounting documents, and Enron Executives extensive gambling for personal gains that the socially-labeled “Two Rogue Enron Traders” had gambled away Enron’s reserves convicting Borget and others for insider trading and fraud. This was the the revelation of all that followed would only through Rational Choice Theory and General Strain Theory prove as a defining revelation in the future of Enron in their unbelievable profit gains that defined the Enron Corporation as a Mega-Corporate Economic Institution maintained by the Enron Illusion.

The Enron Illusion
The Enron Illusion is defined by Rational Choice Theory to manufacture a fantasy in an environment promoting capitalistic Social Disorganization Theory while elevating their status as Innovators to the end goal of successful Rebels who would have normalized this in our Economic Institutions operating under General Strain Theory. The rational choices of Enron Executives being the elitist group of individuals as the rational actors. Enron Rationally involved end/means calculations. Enron freely choose this behavior, both conforming and deviant, based on their rational calculations as detailed by further examples detailed in my thesis. The central element of calculation involves a cost benefit analysis: Pleasure versus pain or hedonistic calculus. This will be evident in Chief Executive Officer Jeffrey Skilling’s Mark-To-Marketing Business Model adopted by Enron to maintain the Enron Illusion while Chief Financial Officer Andrew Fastow falsified accounting to present fictional net worth in costs, profits, and revenue generated by CEO Skilling’s Mark-To-Marketing fictional accounting practice. The Enron Illusion being made by Rational Choice, with all other conditions equal, will be directed towards the maximization of individual pleasure. Jeffrey Skilling signed on as Enron CEO after the Valhalla Scandal after Enron agreed to adopt CEO Skilling’s Mark-To-Marketing Practice.

Enron’s choice was controlled through the perception and understanding of the potential pain or punishment that will follow an act judged to be in violation of the social good, the social contract. Enron being a US Mega-Corporation gave them the illusion of conformity among innovation to the point of almost implemented rebels in their actions under General Strain Theory as a Capitalist Mega-Corp maintained by a web of lies and network of deceit that allowed them to bypass the State for by force of wealth in prestigious influence did Enron Corp create the Enron illusion to delay any swiftness, severity, and certainty of punishment despite their understanding of the law’s ability to control White Collar Mega-Corporate Elitist Criminal behavior. According to General Strain Theory: The Structural boundaries this refers to the processes at the societal level of Trickle Down Economics where Enron maintained a flood of wealth, influence, power, and authority despite all Economic Prestige as the US 7th Largest Corporation allowed them to influence the structure to commit their possibly innumerable crimes. Enron as the Individuals who perpetrated all White Collar Corporate Crime felt the frictions and pains experienced by the individuals exemplified by the executives and the company they kept responsible as they were strained to satisfy their needs despite the reality of their Financial Prestige being absolute fiction where Enron began announcing creating a mountain of falsehoods in their expansions to keep all amazed at the Enron Illusion which eventually came crashing down as this summarizes the Enron Corporation as a prime example of a Capitalist Society to be willing to allow Corporatist Anarchism in total deregulation as an exemplary study of Social Disorganization Theory.

Enron Illusion Creator, Enron CEO, COO, Jeffrey Skilling
CEO Jeffrey Skilling only joined Enron after the agreement that Enron adopt the Mark-To-Marketing accounting procedure where long-term business contracts were signed then the value of the estimated future values of assets, profits, revenues were used as the present accounting net worth as a misleading fictional accounting measure. The ethical and realistic accounting practice of businesses is the costs of supply and revenues from profits generated from products. In this case it was Enron as an Energy Mega-Corporation. Mark-To-Market was proven to be a major financial disaster for Enron was the first non-financial company to adopt it as a practice. This was masterminded by CEO Jeffrey Skilling which would inevitably destroy Skilling as a Machiavellian mastermind of confidence artistry. This was a pressurizing force of General Strain Theory that caused Enron to descend down this path by Rational Choice Theory as it was socially-labeled at the time as “genius” by Enron and associated business persons while championed by Founder Kenneth Lay which Mark-To-Marketing was the causation of the Enron Illusion that precipitated innumerable antisocial activities of White Collar Corporate Crime.

Maintainer of the Enron Illusion, Enron Chief Financial Officer Andrew Fastow
Enron Chief Financial Officer Andrew was in charge of covering Enron CEO Jeffrey Skilling’s Mark-To-Marketing financial accounting fiction in fabricating costs, profits, and revenues. CFO Andrew Fastow presented the fictional net worth from Mark-To-Marketing to investors, shareholders, directors, executive, employees, and the public to maintian the prestige of the Enron Illusion while the reality of Enron being $30 billion dollars in debt. CFO Fastow fabricated fictional companies that Enron traded with daily to support fraud and insider trading among executives on the inside of Enron Illusion while the rest of Enron were unaware of the reality of debt. CFO Fastow maintained the Enron Illusion by aligning with Wall Street Investment Investment Bankers who were on the inside or outside of the Enron Illusion for Insider Trading or Fraudulent Loans for fictional assets. This advanced fraud from CFO Fastow was the apex of asserting a rebellious new cultural norm via legitimate means in transactions while under the General Strain Theory that the Enron Illusion as a veil of deceit would soon fall. CFO Andrew Fastow maintained the Enron Illusion despite the impending crash and revelation defined by Rational Choice Theory and General Strain Theory correlated together in pure innovative amalgamation.

Enron’s Legacy: The House of Cards Falls
The suicide of Enron Executive Cliff Baxter on 1/2002 just before the Congressional Committee in 2/2002 brought a habeas corpus of reasonable guilt to be legitimized against the Executives and their collaborators responsible for the innumerable White Collar Corporate Crimes premeditated, perpetrated, and acted out by Enron. Enron Executive Cliff Baxter should not have taken his own life as a Bipolar Depression sufferer yet highly-intelligent individual. Executive Cliff Baxter may have felt the Strain of Enron and despite Cliff’s concerns of ethics among the elite circle of Enron’s White Collar Corporate Criminals operating under Rational Choice Theory and General Strain Theory. Enron Executive Cliff Baxter by speculation on his actions may have known ethically and morally in the boundaries of the law the CEO Skilling and CFO Fastow were doing explicit criminal activities while Cliff was concerned but uncertain of the apex of White Collar Corporate Crime committed. Only speculation can surround Cliff Baxter for CEO Skilling, CFO Fastow, and Enron Founder Kenneth Lay all faced charges of White Collar Corporate Crime that were so egregiously toxic after the incidents in California surrounding Enron’s involvement to deregulate business in the form of Enron’s donations the the 2000s political establishment in placing California Governor Arnold Schwarzenegger among many other Conservative Politicians and the influential relations to the 2000s Presidential Administration of George H. W. Bush who the Republican Political Institutions collectively state on Enron is summarized, “I did not have political relations with that business.”

Enron Founder, CEO, Ex-CEO, Mastermind, Architect Kenneth Lay died of cardiac arrest before he could face his 45 years prison sentencing of being convicted of 6 securities and wires fraud. Enron CEO Jeffrey Skilling responsible for creating the Enron Illusion which made such crimes permissible under Mark-To-Market accounting practice was convicted of 19/28 counts of securities and wires fraud. Skilling was sentenced to 24 years, 4 months in prison. In 2013, the US Justice Department negotiated a deal with Skilling to cut 10 years from his sentencing. Chief Accounting Officer Rick Causey was charged with 6 felonies of falsifying Enron’s accounting which he plead guilty of conviction for a 7 year sentencing to prison. Enron CFO Andrew Fastow plead guilty to 2 charges of conspiracy in a plea bargain against Lay, Skilling, and Causey for a conviction and sentencing of 10 years without parole. CFO Andrew Fastow became the primary witness along with other Enron Directors in testifying against 16 other people who plead guilty to various White Collar Corporate Crimes at Enron.

Enron’s shareholders lost 74 billion. Enron owed 67 billion to creditors, shareholders, and employees. Enron was ranked at 5th of Fortune 500 and 7th largest US Mega-Corporate Economic Institution. Enron will forever be a classic criminology case study of the single greatest White Collar Corporate Criminal Scandal and Bankruptcy in US history for despite prestige of affluent wealth in influencing the world as a economic authority. In light of the 2007–2008 Economic Recession where Bernie Madoff alone was punished out of innumerable actions of economic and financial Power Elite. Enron and Bernie Madoff prove this revelation true of the United State Capitalist Economic Model. That if Antisocial Power Elitists commit crimes against their fellow social-status of the untouchable Power Elite. The Antisocial Power Elitists will face the absolute law where justice will be served in conviction and sentencing for crimes against their fellow Power Elite.

Sources Cited:

Enron: The Smartest Guys in the Room, Director/Producer Alex Gibney, Magnolia Pictures, Documentary, (2005).

Lecture 11, White Collar Crime. T. R. Young. The Red Feather Institute, (1989)

http://www.critcrim.org/redfeather/crime/011white.html

The Criminology of White Collar Crime, Chapter 10: “General General Strain Theory and White-Collar Crime,” Contributing Writers: Robert Agnew, Nicole Leeper Piquero, Francis T. Cullen. Publisher: Springer New York (2009)

http://link.springer.com/chapter/10.1007%2F978-0-387-09502-8_3)

Enron Fast Facts, CNN Library, CNN, (2016)

http://www.cnn.com/2013/07/02/us/enron-fast-facts/